Dr. Patrick Gallagher
MS: Thank you all for sticking with us here to the finish line of Grid Interop. With a snow storm impending, I'm sure everyone is anxious to get out this afternoon. But we have a real treat here, and it's my pleasure to introduce our keynote speaker, closing keynote speaker, Pat Gallagher, who I think many of you know because Pat was the opening keynote speaker a year ago in Denver when we launched the SGIP at Grid Interop. And so I'd like to welcome Pat back to reflect on what's happened over the last year and what's ahead. For those of you who don't know Pat, he is the 14th Director of the National Institute of Standards and Technology. He was confirmed in November of 2009. Pat oversees a budget of roughly a billion dollars a year and 2,900 employees who are scientists, engineers, administrative, and support staff. Pat previously served as Deputy Director of the agency and before that Director of the NIST Center for Neutron Research. Pat has been very much involved in his career in science and technology policy issues, worked for a time in the Office of Science and Technology Policy at the White House, and currently serves as co-chair of the Standards Subcommittee of the White House National Science and Technology Council.
And I can tell you that Pat has really brought a tremendous amount of change in terms of bringing the strategic importance of standards to the top of the radar screen in political circles. And as a result, I can tell you that NIST is not just a sleepy scientific back water of arcane subjects, but really at the center of a lot of very hot topics, not only the Smart Grid, but cloud computing, health care information technology, and it's really remarkable to see how the U.S. has turned around in terms of standards being sort of not on anyone's radar screen.
When I was in the private sector we used to bemoan the fact that CEOs in industry didn't know how to spell standards and really didn't care and now it's front and center. So, Pat, welcome back, and we're looking forward to your remarks. (Applause)
PG: Good afternoon everybody. This is a real pleasure to be back. So I feel like I opened the first Grid Interop last year and am closing this one. We'll have to figure out what I do next year. Something in the middle. We'll have to see. It's a real pleasure to be back. I thought what I'd do today is share some thoughts about the journey we're on, on Smart Grid, talk a little bit about where we are and where we're going. I think it's particularly timely coming at the very end of a very busy workshop like you've had here. I can see the fatigue in everyone's eyes. I can tell you've been working hard all week.
And it sounds from all reports that it's been extremely successful. I was getting a progress report from George. We have really remarkable progress. The Priority Action Plan Working Group 11 is recommending adding standards to the SGIP catalogue that cover electric vehicle charging. These standards, when finalized, are going to pave the way for the U.S. adoption, widespread adoption of electric vehicles in this country.
The PAP Working Group 1 is looking at the ATF internet standard protocol suite. This is going to lay out basically all of the protocols that cover two-way communication between devices and the grid. This is a foundational achievement that's needed to allow this infrastructure to be developed. PAP 15 is looking at harmonizing two sets of standards dealing with coexistence; on broadband power line communications. This was an essential breakthrough. I understand that it was a tough, hard-earned breakthrough, and yet it was a very strong recommendation, including, this is the first time that a PAP has recommended making compliance with such a standard mandatory. Working Group 10 is evaluating the NAESB energy information usage standard. I can tell you this is an area of intense activity at the White House, because enabling customer interaction with energy usage data is seen as foundational to the acceptance of this technology. And here we have one of the core seed standards that basically sets the stage for this to take place.
So, my hat's off to everybody here. You've earned all of the coffee and treats that you've had here, and hopefully you can get out of town before the snowstorm locks you in even longer.
So what I thought I'd do is, we all know why Smart Grid is critically important. This is one of those rare confluences that doesn't happen very often where basically a technology infrastructure has two major achievements. One is, it can set the stage for us to address the nation's energy problems. It fundamentally enables a whole set of things, including more efficient and effective electrical distribution--making the grid more reliable, more secure, more effective. It enables widespread use of renewable power generation. It gives consumers power--it enables consumers to manage their energy use and it makes them smarter consumers in this space.
But the President was really clear when he was running for office and has really focused on this: that this is also a case where that tackling and addressing that infrastructure need also creates enormous economic opportunity. This is a chance to create jobs, to set up industries. And we know how powerful this is. If you think back a century and a half when this country set out to deploy and build its railroad infrastructure, I'm sure it was motivated at that time by the need to open up this great American West and move goods and people, but we know it fundamentally rewrote what our country looks like.
And I think the understanding is that these infrastructures are enormously powerful and Smart Grid really does have the same potential. We were talking earlier, this really is a disruptive technology, and it's going to be fascinating to see how this disruption takes hold.
So I thought it would be very interesting for us to step back and look at the history, where we've been. And this is sort of a government-centric history, so you all, I will apologize from the beginning.
But three years ago Congress passed a piece of legislation called the Energy Independence and Security Act, which among other things, set up the roles and responsibilities of several agencies, including NIST. I have to tell you when that piece of legislation was passed, we didn't all drop what we were doing and start working on this. It was a much more gradual process. In fact, in many respects in hindsight it was moving too slowly. But there was a lot of ground setting that was going on in terms of starting to identify the moving parts and starting to pull together groups of experts and beginning to address this.
And then about two years ago, two things happened that were critically important, and, in fact changed the whole picture. One of them was a Presidential election, and the other one that was occurring at the exact same time was the onset of this great recession that we've experienced. And the response to the recession included a major piece of legislation called the American Recovery and Reinvestment Act, the Stimulus Bill that we talk about. But actually it was not just stimulus, it will also reinvestment. It was also addressing long-term growth. And that bill made substantial investments in the infrastructure of this country. And one of the key pieces of infrastructure was the modernization of the electrical grid.
And so at that time, DOE was about to invest well over $4 billion into this area, and I think I shared the story with you last year, Secretary Chu, recently confirmed, was calling me at NIST saying "where are the standards"? This has got to move faster, we can't make these investments and be in front of these technical standards.
And we all remember Secretary Chu, Secretary Locke convened a group of 70 leaders and executives from industry and from utility companies and said "I need your commitment to engage in this effort and move this as fast as we can." That kicked off a very, very busy effort. Many of you were involved in this. It was at the time, in hindsight, very ad hoc in the sense that George Arnold came in, and we started this effort to develop a road map. The first thing you do when you are going to march off is decide where you're marching, developed a road map, set some priorities, identified some early standards, some early victories, and really set the stage to move forward.
And then last year, we kicked off a new phase in this effort, which was the transition from basically this planning phase to the beginning of what I would call normal operations. It was the stand up of the SGIP and the understanding that these standards, this technology that we're working on is not static. This is a dynamic set of technologies. And the way we were going to address this was through a public-private partnership. And we were going to set up the mechanics to do this correctly. And so a year ago, in Denver, I was talking to you and we were announcing the stand up of the SGIP.
And today I would say this is going to continue to evolve. We've added some, and I'm going to show, highlight a couple of achievements that we can all look to, but it continues to evolve, and one of the signs of that evolution is that the White House, there is also now, and George is the co-chair of this with Pat Hoffman from the Department of Energy, a National Science and Technology Council Subcommittee on Smart Grid. Now you shouldn't confuse a proliferation of committees at the White House as an indication of progress necessarily, but this one, in particular, is a sign of the importance of this effort and the fact that it intrinsically cuts across a lot of agency lines.
And it was viewed as imperative that we have the machinery, we have the vehicle for these agencies to work effectively and efficiently together to tackle both the acceleration of the standards effort that we're working on, the investments that are being made to support this, but all of the related issues that come up when you're dealing with an infrastructural effort of this scale. And so it's another sign that we continue to evolve and mature.
So if we look at what we've accomplished so far, I think we can take a little moment to quietly celebrate. We have finalized and published the first version of the interoperability framework. We have the road map that will guide us as we focus on the details of this enormous effort. We've issued cyber security guidelines, which are designed to protect the two-way communications and ensure the integrity and trust in this infrastructure. In fact, without that, if we undermine that trust in this infrastructure, the system will not be what it needs to be.
We've established collaborations with partners in other countries. In my view a foundational and critical component, Smart Grid moved immediately into an international effort, and I think this is essential so that not only we work together because this is a problem that, frankly, doesn't stop at anyone's borders, but it means we can also move efficiently towards a set of truly international standards so that manufacturers all over the world have the benefit of a worldwide market.
We've identified the first set of standards that are ready for regulators to begin considering. So we're now beginning the process that the Energy Independence and Security Act envisioned over three years ago, which is this relationship between technical standards setting and regulation. And we're at the beginning of that journey. And we've developed this robust process that you've been sweating over all week, which are these priority action plans where we look at the critical gaps in the standard setting and we put together teams to address those gaps as urgently as possible.
And this is a tough challenge. There's the old adage that if everything is a priority, then nothing is a priority. And yet there are a lot of things that we have to do. So I think this process of identifying a critical subset of true priorities and putting action teams together to address them has been remarkable.
And the successes are quite equally remarkable. These efforts have led to upgradability standards for meters, to ensure that our investments are not stranded and meters can improve as the technology improves. We have a standard for energy usage data that we talked about before that will go into the catalogue of standards for the SGIP. This will set the stage for applications so that consumers can now move to actually managing their energy use in a real way. And it opens up new commercial opportunities for development of these tools by third parties. Standards for electric vehicle connection and charging will also move forward. A guide for internet protocols so we can begin to look at all of the communication technologies that will tie these components together--this is vital for the two-way communication among the devices on the grid, and the coexistence standards for power line carrier signals.
So this is pretty impressive. And I hope you feel that sense of accomplishment. I think this whole audience should be thanked for your efforts on this. There are a few people I would like to single out. The Plenary Officers: Steve Widergren, I want to thank you, and Mark Klerer and Paul Molitor. The Architectural Committee and its chair, Ron Ambrosio. The Testing and Certification Committee: Rick Drummond, Dean Prochaska, and Tobin Richardson, and the SGIP Governing Board and its chair, John McDonald and vice chair, John Caskey and secretary, George Bjelovuk.
There are many, many others. Those of you working at chairing and leading the Priority Action Working Groups--those group members and technical experts--I wish I could read all of your names today, but I want to extend my appreciation for your efforts and for your commitment to this project.
So that's sort of the journey we've been on. What I thought I would do is sort of reflect a little bit on where we're going to head from here. And, in particular, it's going to be an interesting time because it's also a point where we're going to begin to see some of the results of our work.
I think to characterize, there's been a lot of talk about valleys of despair and peaks of bliss and things of that type. But rather than use that terminology, let me use the analogy that a year ago we were in the design phase. We were designing a process that we were going to use to work with each other. And design phases are exciting; we've got architectural drawings and we can see what it's going to look like, and no one's gotten dirty yet. It's kind of fun.
Right now we're at the construction phase, and we're in the mud pits, and we're shoveling, and it's hard work. But this is actually where it becomes reality. And I actually think this is the point of the process where most of the dividends of our effort are going to be set, where we really are setting the stage for success. It's also the point sometimes where it's hard to keep your eye on the ball because you're no longer looking at the design drawings, you're down in the ditches working. So it's going to be a critical time.
And as I said last year, the goal we're after is not the completion of our work, but the achievement of a process where our ongoing work is basically made routine and we can continue to work effectively together, because as long as technology improvements can happen, this is not going to be static at all. In fact, one of the challenges that not everyone who engages in this fully understands that we have so many participants in this process, the realization that this standards effort touches things like regulation, this standards effort touches policy. We have to also educate regulators and policy makers how this works and to expect this dynamic and ongoing process. And that's going to be a key part of our work and something that we're already beginning to see as we move forward.
This is also a point in the process where we do start to see the fact that tackling an effort of this magnitude does create enormous economic activity. To give you some examples, one: we're already seeing results that Smart Grid technology, in fact, does have many of the things we were saying it would do a year ago.
Results from several demonstration studies are now showing that Smart Grid technologies perform as intended, saving customers money and easing strain on the power grid. We started this effort believing that was the case. In Washington State, for example, the GridWise Olympic Peninsula Project managed by the Pacific Northwest National Laboratory and funded by DOE has tested Smart Grid technologies in more than 100 homes as well as with several commercial and municipal partners, and after one year consumers were saving approximately 10 percent on their electrical bills, in spite of the fact that utility costs were increasing and the fact at the same time peak demand in this area fell by 15 percent. This is a good omen. This means these technologies, in fact, worked as we thought.
The Brattle Group consulting firm estimates that over the next 20 years the U.S. will be spending on the order of one and a half to two trillion dollars modernizing its electricity system. Now a lot of that is going to go to the large aging power plant and power generation infrastructure, but approximately a third--about 600 billion--will be spent on the modernizations associated with the grid and transmission. This is a major investment.
The Grid Wise Alliance estimates that the Smart Grid will also put back into the economy about $1.8 trillion, largely through cost avoidance, by reduced energy usage and improved reliability of the system and by the fact that this new infrastructure means that the planned repairs on our old infrastructure won't be required. That's about $70 billion looking 20 years down the road. So there are immediate payoffs already there.
The International Energy Agency estimates that worldwide, $13 trillion will be spent globally to modernize the world's power grids between now and 2030. This is the market that we're talking about. This is a tremendous opportunity not only to move the world towards a cleaner and greener set of technologies, but also to drive economic growth and to create opportunities for those that manufacture, sell, build, and install this equipment.
These jobs will number in the hundreds of thousands. KEMA--another consulting firm--estimated last year about 140,000 new jobs will be created in the Smart Grid just in the United States. We're already beginning to see this happen. The Department of Energy awarded $100 million for 54 Smart Grid workforce training programs to help prepare the next generation of workers in the utility and electrical manufacturing industries get ready for this new technology. And according to the estimates of those companies winning these awards, these programs alone will train 30,000 American workers.
The news, it's hard to read the news recently and not realize that there are planned, significant investments in Smart Grid transmission capability. There's been news, press releases about offshore wind generation grids and also grids to handle large solar farms. The 400-megawatt BrightSource complex now under construction in the Mojave Desert, that power generation project alone is going to create, has already created about 1,000 construction jobs and will create another 100 long-term facility management jobs when it's completed. So you already begin to see the front end of this enormous set of economic activities.
So these are just a few examples. I think now what we need to do is focus on how do we set the stage for continued success. And in my mind, there are sort of four overriding goal areas that we should focus on.
One is we have to empower consumers. The benefit of these technologies has to be visible to those that use the technologies. To sustain the investment, to make the business model work that has to be the case and so empowering consumers has to be a critical activity.
We have to continue to spur innovation and open markets. The standard setting that we're involved in fundamentally enables new ideas and new opportunities to take hold, and that has to continue to be a priority. We have to continue to facilitate regulators as they go about their task of adopting this and integrating our work into their work, and we have to strengthen the international ties that are so critical to this effort.
Let me give you an example. The standards for appliances to communicate with the grid that are, are necessary now for the appliance manufacturing industry to move forward. There is a danger in not having the standards ready. The appliance industry is ready to go forward with its plans to introduce smart appliances that react dynamically to pricing information and congestion information that they receive from the grid. These appliances will react not only during periods of peak demand, but any time, so that they can automatically adjust their energy usage accordingly. Without a unit, a set of effective national standards, this simply can't happen. We have to continue to leverage the work that's underway to make this, to move this work forward.
We have to work on a testing and certification framework so that the standards development we do, in fact, are translated into meaningful use. The first candidates for implementation are in the areas of substation automation, grid monitoring, and control communications. Getting this right is important because it sets the conditions for market acceptance that are so important to this technology. Consumers and the public need the tools to manage their energy more effectively. This includes not only the technology that we're working on, but also, frankly, education. They need to understand in plain language what these tools will enable them to do, and that effort has to continue.
And we must continue to engage international players in the Smart Grid arena, and frankly, I think this is going to continue to grow dramatically. I want to point out that Secretary Locke will be making a number of important international trade missions in the coming year. Innovation, technology, and trade are all linked. The trade balance of the United States is driven positively by our export of high technology, and Smart Grid is a key enabler in this. International standards are an important part of the equation. We are working to collaborate internationally wherever possible, because this stimulates innovation. It spurs efficient and effective competition to lower cost for suppliers, utilities, and consumers.
International standards also allow Smart Grid products developed by U.S.-based companies to be sold around the world. It opens up markets. We want to maximize the opportunities of those companies who are innovating and developing new technologies and employing Americans so that they can design, build Smart Grid products and systems and sell them wherever they are being built. And we want to be, frankly, a net exporter of Smart Grid products and systems. We don't want to simply outsource this and import all of our needed technology.
So this is critically important. I think the work that we've done thus far has been a critical first step. I think we have the mechanisms in place to continue to work together. And it's clear from the results from this week that, in fact, we've got the right group here to move these difficult technology challenges forward.
As I said, a year and a half ago, Secretary Locke, Secretary Chu convened this group of industry CEOs in the Old Executive Office Building at the White House, and at that time we hadn't done anything yet, and the real focus was to really kick-start and get their buy in. And I can still remember the demand that was made, the request that was made was: we can't do this without you, and we want you to commit your organizations to this national effort. I think you are proof that that commitment has been carried out. I want to applaud you for your efforts and for your commitment and ask you to renew that commitment as we continue to move forward on this great challenge. So thank you very much. (APPLAUSE)